Canadian Dollar falls despite hawkish BoC comments as Oil price volatility dominates

USD/CAD recovers as volatile oil prices leave the Canadian Dollar surrendering its earlier advance.
Persistent inflation risks could require additional rate increases, BoC Governor Tiff Macklem indicates.
Ahead of Friday’s Canadian and US employment releases, stronger US jobs figures underpin the US Dollar.

1.3993 is the level at which USD/CAD trades at the time of writing. The pair is virtually unchanged after bouncing from an intraday low of 1.3950. Tuesday’s recovery comes as a stronger US Dollar (USD) and oil price volatility erode the Canadian Dollar’s (CAD) earlier gains. Markets are also weighing hawkish comments from Bank of Canada (BoC) Governor Tiff Macklem.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Oil price swings have a direct bearing on the Loonie, given Canada’s position as a major crude exporter. On Tuesday, crude initially advanced after the Wall Street Journal (WSJ) reported a US strike on Iran’s Qeshm Island. Prices then retreated following unconfirmed reports of concessions by Washington and Tehran on Iran’s nuclear programme and frozen funds. West Texas Intermediate (WTI) subsequently recouped part of the decline, trading flat at around $95 a barrel.

Appearing before parliament, BoC Governor Macklem warned that “further rate hikes may be needed,” while emphasising that heightened uncertainty would require decisions to be made “meeting by meeting”. Rising oil prices and refinery margins are increasing costs for businesses and consumers, he said. A greater share of those costs is expected to pass through to inflation over the coming year.

Macklem’s projections put CPI inflation at “3.5% by year-end” and “at or above 3% through much of 2027”. He expects inflation to move back close to the BoC’s 2% target by mid-2028.

Uncertainty over US-Iran talks and a hawkish Fed outlook are helping the US Dollar hold steady across the border. Better-than-forecast US employment figures have also supported the Greenback. Traders, however, are avoiding aggressive positioning amid the US midterm elections.

September’s JOLTS Job Openings climbed from 7.19 million to 7.523 million, beating the 7.13 million forecast. After rebounding from an intraday low of 101.63, the US Dollar Index (DXY) is flat at around 101.80. The index measures the currency against six major peers.

Friday brings employment figures from both countries, shifting the focus to Canada’s Labour Force Survey and US Nonfarm Payrolls (NFP). As traders weigh the possibility of further rate increases in December, the releases could influence expectations for the next BoC and Fed decisions.

Canadian Dollar: Today’s Currency Moves

Today’s percentage moves in the Canadian Dollar (CAD) against the listed major currencies appear in the table below. The Japanese Yen was the currency against which the Canadian Dollar performed most strongly.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.02%	-0.07%	0.38%	0.00%	0.36%	0.02%	0.30%
EUR	0.02%		-0.04%	0.37%	0.02%	0.38%	0.04%	0.31%
GBP	0.07%	0.04%		0.43%	0.07%	0.42%	0.08%	0.36%
JPY	-0.38%	-0.37%	-0.43%		-0.36%	-0.01%	-0.34%	-0.06%
CAD	0.00%	-0.02%	-0.07%	0.36%		0.36%	0.02%	0.30%
AUD	-0.36%	-0.38%	-0.42%	0.01%	-0.36%		-0.32%	-0.06%
NZD	-0.02%	-0.04%	-0.08%	0.34%	-0.02%	0.32%		0.28%
CHF	-0.30%	-0.31%	-0.36%	0.06%	-0.30%	0.06%	-0.28%

Percentage movements between major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. To read CAD (base)/USD (quote), for instance, choose the Canadian Dollar on the left and follow that row across to the US Dollar column. The intersecting cell gives the percentage change for that pair.